WTI Crude Outlook: 2/13

by on February 13, 2014 5:03 pm BST

Fundamentals for West Texas Intermediate (WTI) crude has been rather bullish of late. According to Energy Information Administration (EIA) data, crude stockpiles at Cushing, Oklahoma declined 6.6 percent, or 37.6 million barrels last week. However, economic data out of the United States is adding to resistance above $100 per barrel on fears of slower growth.

Retail sales came in lower than expected at a decline of .4 percent versus expectations of no gain month-over-month. This month’s print was .3 percent worst than last as consumers are clearly watching their wallets. “The retail sales and jobless numbers this morning were worse than expected and raise concerns about the economy,” said Michael Lynch, president of Strategic Energy & Economic Research. Furthermore, the labor market is still seeing trouble as initial jobless claims jump to 339K, up 8K claims since last week. Analysts were expecting 331K, or no change, from the previous print.

Crude’s price is highly sensitive to economic data as it is to its own fundamentals. If the emerging markets, including China, continue to slowdown, the price of crude can be effected.

Crude has seen a boost through $100 per barrel after consolidating near $96-to-$98 per barrel along an ascending trend line and through the upper resistance trend line. The daily chart of crude futures shows that resistance is currently being priced in at at $100.44, and that breakouts above this level have been sold. If crude can close above this price action resistance, the next bullish target is found at $102.18 per barrel, or $1.74 in upside.

However, if momentum fizzles, crude can see a pullback to the closest price action support of $98.78, with deeper support at $98.00/12. There is a 20/200 EMA bullish crossover that could help crude close above the current resistance.

1D Chart of QM

1D Chart of QM